Why is it important to choose a bank before deciding on property?
- By Mr Rishi Mehra, Co-founder, Deal4loans.com
Finding a good bank for home loan is as important as selecting a good property. In fact, there is no harm in zeroing in on a bank/housing finance company before selecting a property.
You would want to find a bank that not only fulfils your loan requirements, but has easier terms and conditions, documentation and lower charges. We list a few of the reasons why you should select a bank before deciding on a property:
Faster disbursal of loan: The bank must have faster processes to disburse loan once you have finalised the property. This one can find out from existing customers, online forums and reviews.
Lower charges and fees: Check all the fees that the bank charges and compare it with other banks. If the charges are not too high compared to others, check the quality of services offered. One should not go entirely by lower fee and charges. The speed and quality of services is also important.
Loan-to-value ratio: A simple eligibility test on the bank website can give you a lot of idea about what kind of loan amount the bank is ready to give you based on your income and price of the property you plan to buy. Usually banks offer 75-80% of the value of property as loan. In case of ready-to-move properties, banks offer additional loan for repairing and renovation.
Employment status: This is applicable mostly in case of self-employed individuals. Not all home loan companies are kind on this particular class of borrowers. Find a bank or housing finance company that has speciality in offering loan to self-employed individuals.
Documents required: Some banks might be less stringent when it comes to certain documents—nature of address proof, income proof, etc. Select a bank whose terms and condition you satisfy. This is an important exercise you must do before finalising a property. This way you ensure that at the time of disbursal, your application is not rejected.
Loan tenure: This is important for those who are closer to retirement. Some banks offer loan only for a tenure that is not more than the difference between the current age and the age of retirement (60 years), while some banks (mostly PSU banks) extend the loan tenure till the applicant’s age of 70 years.
Types of loan: Loans can be fixed, floating or partially fixed. Not many banks offer fixed rate loans, while some offers partially fixed rate loans, where the rate of interest is fixed for first three-five years. Depending on your need, you can select a bank that offers your kind of loan. However, it is generally advised to go for floating rate loans as fixed rate loans are expensive and comes with reset clause.
Co-applicants: The most commonly accepted co-applicants are parents, children and spouses. However, some banks may also offer loans to co-applicants who are siblings. If you want to co-apply for a loan with your sibling, find the banks that accept such applications.
Deal4loans.com is an online loan information and application portal which provides the customer with valuable information on all available loans in India. It has pioneered the concept of online comparison for retail Loans in India.